Cute Doesn’t Cut It: Why Startups Must Keep Control Of Expenses

Starting a new company isn’t as cheap as you might think – and the expenses add up quickly.

It’s not just the cost of materials, or stock, or machinery, but a host of things in the background that you’re going to need to get the venture off the ground.

That’s why, even if your idea has legs, it’s going to need careful management if it’s to fly.

OK; enough of the weak puns, because this is serious for startups. Of all the things that someone in a new business is expected to focus on, the one that is too easily neglected is finance management. In the push to launch a company there will be a thousand details crying out for attention, and most of them come with a price tag. Keeping a close eye on costs is therefore vital, otherwise spending can spiral out of control, and take the fledgling business into a hole from which it can’t climb out.

Just how a startup should manage its money is a decision for the company owners, but my advice would be to make the decision based on the other thing they’re going to have to worry about – the time available.

The solution needs to bring together accuracy and ease of operation, so records can be kept on the fly, before pressure to work on something else squeezes details of an important expense to the back of the mind, or even out of it completely.

Trust in technology

That’s what makes the technology of an expense management app such a boon. Stored on a smartphone, these powerful business tools allow on-the-spot recording of business expenses, backed up careful collation of the records.

Having a clear understanding of what’s been spent will allow interrogation of spending data later, and that in turn will provide the foundation for sound decision-making to take the business onwards and upwards. Further down the line the decision-making that happened in the early days could be the difference between success and failure. Sound financial management really is that important.

When reality kicks in

Enthusiasm is a tease, and will run away with you, if you let it. The excitement that comes with a new business idea isn’t enough to make it work, and it’s during the first year for a new company that reality may kick in; when figurative damp patches appear on the walls of what seemed a watertight scheme when you embarked on it.

This may sound brutal, but in the end only money can be a yardstick of your success; and only by monitoring it very carefully will you know the financial health of your business.

The amount of effort you’re putting in is no more a measure of success than the enjoyment you’re getting out of being your own boss. Both can lie to you. Massive effort counts for nothing if you’re a busy fool. Massive enjoyment counts for nothing if the bills aren’t paid.

With money, you can buy the things your company needs (and don’t confuse ‘want’ and ‘need’; they’re completely different). With money, you can invest for the future; you can promote your product, and make it better. You will even get to the point when you can pay yourself. But remember, it needs to be your business’ money. Although financing can be available, it will come at a cost of some kind.

Start-ups aren’t start-ups for ever. When they mature, they can be rich sources of employment and a positive influence on the business community and the people who live in the areas in which they operate.

Work hard, and much can be achieved. But finance will always be the elephant in the room. Ignore its influence at your peril. Monitor your business expenses to within an inch of their lives, and form a habit that will make a successful business that will outlive you.

You may also like...